Boylan v. G. L. Morrow Co., Inc.

• Decision Date: 03 July 1984
• Citation: 468 N.E.2d 681,479 N.Y.S.2d 499,63 N.Y.2d 616
• Parties: , 468 N.E.2d 681 Thomas BOYLAN, Respondent, v. G. L. MORROW COMPANY, INC., et al., Appellants.
• Court: New York Court of Appeals Court of Appeals

Page 499

479 N.Y.S.2d 499

63 N.Y.2d 616, 468 N.E.2d 681

Thomas BOYLAN, Respondent, v. G. L. MORROW COMPANY, INC., et al., Appellants.

Court of Appeals of New York.

July 3, 1984.

Robert M. Brown, Albany, for appellants

Edward R. Feinberg, Albany, for respondent.

OPINION OF THE COURT MEMORANDUM.

The order of the Appellate Division, 96 A.D.2d 983, 466 N.Y.S.2d 832 (1983), insofar as appealed from, should be reversed, with costs, the first and second causes of action dismissed, and the question certified answered in the affirmative.

Defendant's motion to dismiss the first and second causes of action on the Statute of Frauds defense should have been granted. Plaintiff's argument that the Statute of Frauds defense must be deemed defeated because defendant admitted the existence of an oral contract is without merit. Defendant's concession that, for purposes of the motion to dismiss, the facts asserted in the complaint must be accepted as true, was not, as plaintiff asserts, an affirmative admission sufficient to defeat the Statute of Frauds, but was merely defendant's recognition of the procedural context in which the motion arose. Moreover, if this case were to be decided under the statute relied upon by the dissenter in this court, we would note that that statute (Uniform Commercial Code, § 8-319, subd. ) requires an affirmative admission that a contract was made for the sale of a stated quantity of described securities at a defined or stated price. The purported admission in this case has none of the requisite certainty, and therefore is not sufficient to defeat defendant's motion to dismiss. Nor does anything in the Uniform Commercial Code provision suggest that a CPLR 3211 motion to dismiss on Statute of Frauds grounds may not be entertained until there has been an opportunity for an admission concerning the claimed oral agreement. In some instances an examination before trial could be had before the motion to dismiss is made or the motion could be held in abeyance until the plaintiff has had an opportunity to depose the defendant.

Finally, we note that plaintiff has failed to state a fraud cause of action inasmuch as a present intent not to carry out the promise of future action is not alleged (Lanzi v. Brooks, 43 N.Y.2d 778, 402 N.Y.S.2d 384, 373 N.E.2d 278).

MEYER, Judge (dissenting).

Subdivision (d) of section 8-319 of the Uniform Commercial Code excepts from its proscription against enforcement of an oral contract "A contract for the sale of securities * * * the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract was made for sale of a stated quantity of described securities at a defined or stated price." Neither the language of that provision nor the history of its adoption, nor its interpretation by the courts of this or other States warrants or sustains the construction of it which the majority espouses. To the contrary, the direction of subdivision (1) of section 1-102 that the Code "be liberally construed and applied to promote its underlying purposes and policies", one of which is "to make uniform the law among the various jurisdictions" (§ 1-102, subd. par. ), requires, as the courts below held, that a motion to dismiss on the ground of the Statute of Frauds be denied where, as here, the moving party concedes the making of the oral agreement alleged in the complaint. Respectfully, therefore, I dissent.

I

Plaintiff's complaint alleges that after he advised defendants of his intention to leave his employment with defendant G. L. Morrow Co., Inc., to form his own company he was offered, among other things, 10% ownership of the corporation to induce him to stay, that he accepted those terms and continued his employment with the corporation, but that defendants have failed and refused to pay to him the value of his 10% share of defendant corporation, which has now merged with another corporation. Without answering the complaint, defendants moved under CPLR 3211 (subd. par. 5) to dismiss the complaint as barred by the Statute of Frauds. The affidavit of defendant Gerald L. Morrow, submitted in support of the motion, states that there was no "written agreement with regard to the transfer of any corporate stock of the defendant to the plaintiff although the subject was discussed orally by plaintiff and me."

Supreme Court denied the motion in an opinion which stated that "Defendant concedes that it did offer Plaintiff 10% of the business and that Plaintiff accepted said offer" and that "they themselves admit the offer and the acceptance." The Appellate Division affirmed in a memorandum which stated in pertinent part: "Further, for purpose of this appeal, defendants concede that 'the allegation of Plaintiff * * * that Gerald R. Morrow offered Plaintiff * * * 10% ownership of G. L. Morrow Co. Inc., if he did not terminate his employment must be accepted as true'. This being the case, we agree with Special Term that Gross v. Vogel, 81 A.D.2d 576, 437 N.Y.S.2d 431, is controlling and, accordingly, affirm" (96 A.D.2d at p. 984, 466 N.Y.S.2d 832 )". ¹ Justices Main and Levine dissented from that part of the majority holding in a dissent by Justice Levine which reasoned (96 A.D.2d, at p. 985, 466 N.Y.S.2d 832) that: "Defendants' concession of the existence of the oral agreement, solely for purposes of a ruling on the validity of the complaint, does not constitute any extrajudicial or judicial admission to take the contract out of the Statute of Frauds. Obviously, for purposes of a motion to dismiss the complaint, all of its allegations are deemed to be true. But the existence of the alleged contracts were similarly assumed on the motions to dismiss in Russell v. Societe Anonyme des Establissements Aeroxon (supra ), 268 N.Y. 173, 197 N.E. 185 and Markey v. Kelly (supra ), 10 A.D.2d 650, 197 N.Y.S.2d 891. The dismissals of the complaints in both cases preclude reliance on defendants' solely procedural concession as to the oral promise here. Whether there actually was such an oral promise made by defendants, the complaint fails to allege any facts authorizing enforcement of that promise. As further stated in Burns v. McCormick, 233 N.Y. 230, 235, 135 N.E. 273, 'The most that can be said against Mr. Halsey is that he made a promise which the law did not compel him to keep, and that afterwards he failed to keep it'." (Italics in original; matter in brackets supplied.) The Appellate Division has certified to us the question whether it erred as a matter of law in affirming Special Term's denial of the motion to dismiss. For the reasons that follow, that question should be answered in the negative.

II

The facts stated in the complaint constitute a contract "for sale of a stated quantity of described securities at a defined or stated price" (Uniform Commercial Code, § 8-319, subd. ), the quantity being 10% of the corporation's stock and the price being plaintiff's continued employment (Gross v. Vogel, 81 A.D.2d 576, 437 N.Y.S.2d 431, supra; see Burnside & Co. v. Havener Securities Co., 25 A.D.2d 373, 269 N.Y.S.2d 724). Thus, the issue before us is whether the specific Statute of Frauds in question (Uniform Commercial Code, § 8-319, subd. ) permits dismissal of the complaint. ² Under different circumstances, it may well be plaintiff's burden in opposing a motion to dismiss to seek disclosure and a continuance, pursuant to CPLR 3211 (subd. ), in order to obtain defendant's testimony or admission concerning the claimed oral agreement. In the instant case, however, any such problem is obviated by the affirmed finding that defendants conceded the making of the oral agreement. Nor is it material that, although Special Term's finding to that effect was express and unequivocal, the Appellate Division majority noted that the concession was "for purpose of this appeal" or, as the dissenters in that court put it, that defendants' concession of the oral agreement was "solely for purposes of a ruling on the validity of the complaint." The Russell and Markey cases, on which the dissenters below relied, involved earlier Statutes of Frauds provisions (Personal Property Law, former § 31, subd. 1; former § 85, subd. 1) which did not contain any exception with respect to an admission "in his pleading, testimony or otherwise in court" as does subdivision (d) of section 8-319 of the Uniform Commercial Code. The concession found by both courts below, having been made by defendants as part of their motion to dismiss on Statute of Frauds grounds, is undeniably an admission "otherwise in court," which mandates denial of their motion under the present statute. Indeed, as hereafter set forth, the proper construction of the statute is that even absent such a concession a complaint on an oral agreement within its terms should not be dismissed prior to a denial by defendants that an oral agreement was reached.

III

Subdivision (d) of section 8-319 of the Uniform Commercial Code, pertaining to the sale of securities, and its analog, section 2-201 (subd. par. ), pertaining to the sale of goods, were enacted in New York in 1962 (L.1962, ch. 553, eff. Sept. 27, 1964) and have not been amended since in any manner relevant to the instant case (cf. L.1982, ch. 928, § 20). Section 8-319 provides in pertinent part:

"A contract for the sale of securities is not enforceable by way of action or defense unless

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"(d) the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract was made for sale of a stated quantity of described securities at a defined or stated price."

The analogous provision for the sale of goods, section 2-201, provides:

"(3) A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable

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"(b) if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was...